Lead-in: Recently, China's dichloromethane market has shown a high-frequency volatility trend, characterized by a sharp decline followed by a bottom rebound. Squeezed between high raw material costs on the input side and persistently weak demand on the output side, operational pressure in the industry has been accumulating. At the beginning of this week, a strong surge in feedstock liquid chlorine prices, coupled with the initiation of pre-May Day holiday restocking demand, provided an opportunity for the dichloromethane market to rebound. However, the fundamental supply-demand balance remains loose, posing significant challenges to the sustainability and upside potential of any subsequent price increases.

Sharp Decline: Squeezed by High Inventories and Weak Demand

Table 1. Comparison of Mainstream Market Prices for Dichloromethane

| Product | Region/Category | Current Period Avg. | Previous Period Avg. | Change | % Change | Unit |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Dichloromethane | Shandong | | 2598 | 25 | 0.97% | USD/ton |
| | Jiangsu | | 2748 | 89 | 3.35% | USD/ton |
| | South China (Bulk) | | 2920 | -80 | -2.67% | USD/ton |
Source: chempricehub Intelligence

The initial sharp decline in dichloromethane prices was primarily driven by a supply-demand imbalance and disrupted cost pass-through. Industry operating rates remained around 80%, exerting significant oversupply pressure. Furthermore, after remaining at relatively high levels following the Middle East conflict, some small-to-medium-sized downstream users showed insufficient capacity to accept high-priced raw materials. This lack of substantial demand support led holders, aiming to destock, to offer substantial price reductions. However, early this week, the sharp increase in feedstock liquid chlorine prices significantly raised cost pressure for methane chloride producers, creating a dilemma where "inventory moves slowly with price increases, but costs are lost with price cuts."

Within the week, domestic methane chloride supply increased compared to the previous week. Production volume for this period was 68,300 tons, up 3.08% period-on-period, while capacity utilization reached 80.81%, a rise of 2.41 percentage points.

Rising inventory pressure at regional production enterprises was a core factor forcing prices down. Although Shandong Jinling Dawang Plant reduced its operating rate to 50% and Luxi Chemical operated at a low rate, the restart of units at plants like Dongying Huatai and Fujian Huanyang, combined with stable output from new capacity, resulted in ample overall supply and high capacity utilization. Product movement from producers faced difficulties, leading to continuous inventory build-up. To alleviate inventory pressure, major producers actively lowered their ex-factory quotations.

Figure 1 & 2: [Image description omitted - data trends for methane chloride weekly production & capacity utilization]

On the demand side, it remained a key price-dampening factor. The largest downstream sector for dichloromethane is refrigerant R32, accounting for approximately 41% of consumption. However, procurement for R32 is largely captive (internal use), limiting its impact on the external market. Weak demand from traditional sectors like pharmaceuticals, electronics cleaning, and coatings further compressed market space. Downstream companies generally adopted a "buy-as-needed" procurement strategy with limited willingness to stockpile, causing dichloromethane inventory levels to fluctuate rapidly.

Trend Reversal and Rebound: Short-Term Drivers from Raw Material Co-Movement and Pre-Holiday Restocking

Table 2. Comparison of Domestic Methane Chloride Costs and Profits (Unit: Yuan/ton)

| Data Type | Data | Current Period | Previous Period | Change | % Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Profit | Cost | 2519 | 2589 | -70 | -2.70% |
| Profit | | -65 | 119 | -184 | -154.62% |
Source: chempricehub Intelligence

Figure 4: [Image description omitted - Shandong dichloromethane daily profit trend, 2024-2026]

After the steep price decline last weekend, the dichloromethane market experienced a rebound halt and price uptick at the start of this week. The primary driving forces were the strong rise in costs and phased restocking by downstream buyers ahead of the holiday season.

The feedstock liquid chlorine market was the core catalyst for this rebound. Due to unit maintenance and tight supply, liquid chlorine prices rose rapidly. The mainstream average price in the Shandong region increased from a trough of 300 Yuan/ton to 650 Yuan/ton. This significant price surge directly pushed up dichloromethane production costs. Simultaneously, methanol prices maintained high-level fluctuations, further solidifying the cost floor. In an era of severe oversupply in the methane chloride industry, the cost side has become a crucial influencing factor.

Looking ahead, the dichloromethane price trend is expected to weaken with fluctuations compared to this week. Key influencing factors are as follows:

1. Supply Side: There are expectations of increased production. Recent sales have faced renewed obstacles, likely leading to another accumulation of enterprise inventories. Overall goods supply is expected to remain ample.
2. Demand Side: As the current wave of concentrated pre-holiday restocking concludes, purchasing activity from downstream factories and traders will slow down, gradually diminishing the actual market demand support.
3. Cost Side: Feedstock methanol is expected to continue fluctuating at high levels, while liquid chlorine prices are likely to stabilize at moderate levels. The combined pressure from these two raw materials will persistently burden methane chloride producers' overall costs.
4. Export Side: Relatively high domestic offers are weakening export price competitiveness. Combined with slowing end-user demand overseas and restricted trade flow in some regions, export orders are declining year-on-year. The role of foreign sales in absorbing domestic supply continues to weaken.

The fundamental supply-demand outlook for dichloromethane in the coming period appears weak. In the short term, inventory pressure at plants is manageable, suggesting a narrow sideways consolidation trend. However, as the May Day holiday approaches, enterprises generally prefer to operate with low inventories, seeking to avoid risks and reduce stockpiles. Overall, the near-term domestic dichloromethane market lacks upward momentum, and prices are likely to fluctuate with a downward bias.